United States v. Paramount Pictures, Inc., 334 U.S. 131 (1948) (also known as the Hollywood Antitrust Case of 1948, the Paramount Case, or the Paramount Decision), was a landmark United States Supreme Court antitrust case that decided the fate of film studios owning their own theaters and holding exclusivity rights on which theatres would show their movies. It would also change the way Hollywood movies were produced, distributed, and exhibited. It also opened the door for more foreign and independent films to be shown in U.S. theaters. The Supreme Court affirmed the United States District Court for the Southern District of New York's ruling that the existing distribution scheme was in violation of United States antitrust law, which prohibits certain exclusive dealing arrangements.

The decision created the Paramount Decree, a standard held by the United States Department of Justice that prevented film production companies from owning exhibition companies. The case is important both in American antitrust law and film history. In the former, it remains a landmark decision in vertical integration cases; in the latter, it is responsible for putting an end to the old Hollywood studio system.

As part of a 2019 review of its ongoing decrees, the Department of Justice issued a two-year sunsetting notice for the Paramount Decree in August 2020, believing the antitrust restriction was no longer necessary as the old model could never be recreated in contemporary settings. Separate cases were also filed against large independent chains, including the 148-theater Schine.

The federal government's case was initially settled in 1940 in the District Court for the Southern District of New York with a consent decree, which allowed the government to resume prosecution if studios were noncompliant by November 1943. Among other requirements, the District Court-imposed consent decree included the following conditions:

  1. The Big Five studios could no longer block-book short film subjects along with feature films (known as one-shot, or full force, block booking);
  2. The Big Five studios could continue to block-book features, but the block size would be limited to five films;
  3. Blind buying (buying of films by theater districts without seeing films beforehand) would be outlawed and replaced with "trade showing", special screenings every two weeks at which representatives of all 31 theater districts in the United States could see films before theatres decided to book a film; and
  4. The creation of an administration board to enforce these requirements.

The studios did not fully comply with the consent decree. In 1942, they instead, with Allied Theatre Owners, proposed an alternate "Unity Plan". Under the Plan, larger blocks of theatres were blocked with the caveat of allowing theaters to reject films. Consequently, the Society of Independent Motion Picture Producers (SIMPP) The 1943 case went to trial on October 8, 1945, one month and six days after the end of World War II.

  • An increase in independent producers and studios to produce their film product, free of major studio interference.
  • The beginning of the end of the old Hollywood studio system and its golden age, allowing creative freedom for both behind-the-camera personnel and actors.
  • The weakening of the Hays Code, because of the rise of independent and "art house" theaters which showed foreign or independent films made outside of the Code's jurisdiction; the Hays Code was replaced by the age-based rating system in 1968.

Reviews and termination of the Paramount Decrees

In 1980, the United States Department of Justice under President Ronald Reagan began a review of all consent decrees that were more than 10 years old. In 1983, the Department of Justice announced that it was in the "final stages" of reviewing the Paramount Decrees. Eventually, in February 1985, the Department of Justice announced that, although it was not formally terminating the Paramount Decrees, it would no longer pursue enforcement of the decrees in cases where doing so was “in the public interest.” According to media historian Jennifer Holt, "Effectively, this statement dissolved the authority of the decrees, if not legally then practically." In 2019, the DOJ sought to terminate the Paramount Decrees, which would include a two-year sunset period as to the practices of block booking and circuit dealing to allow theater chains to adjust. The Department stated it was "unlikely that the remaining defendants can reinstate their cartel" as reasoning for terminating the decrees. The DOJ formally filed its motion for a court order to terminate the decrees on November 22, 2019. The move was opposed by independent movie theater owners, including the Independent Cinema Alliance, and independent filmmakers.

See also

  • Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251 (1946), where the Supreme Court held that major Hollywood distributors had engaged in an antitrust conspiracy preventing certain independent movie houses from showing first run films.
  • Buchwald v. Paramount
  • Financial Interest and Syndication Rules
  • Leibovitz v. Paramount Pictures Corp.
  • Paramount Communications, Inc. v. QVC Network, Inc.
  • United States v. Loew's Inc.

References

Further reading